Thanks, man. Thanks for taking one for the team. And by the way, the ending of your letter, that bit about working to support your efforts so that, “no President ever again faces what you and your economic team faced upon taking office in 2009.” Dude, that was brilliant. If Joe decides to run, he’ll thank you for that line. I know it’s MasterCard’s line but man, that was Priceless. While I know Americans have forgotten the days of W and Lord Voldemort, it never hurts to remind them of the reign. You’re still my main man. Ever yours, B.
To read this morning’s Wall Street Journal headline, I was waiting for E&Y’s Mel Masuda to come out in his tux with the envelop. “And finally, for best Supporting Actor in a melodramatic series, the Oscar goes to Lawrence Summers.” The headline “Summers Bows Out of Fed Race,” implies that there’s a field of economic Olympians brimming with great ideas lining up outside the Oval Office, resume and business plan in hand. “The President will see you now Mr. Summers,” summons the librarian-looking attendant outside the door. “Oh, my god,” he thinks to himself, “really! Could it be me in front of the long line of esteemed candidates?” Rushing past the others outside the door down the long hall, hundreds of graduates from Harvard, the University of Chicago, and the London School of Economics, all with their “I love Ben” lapel pins brightly shining, watch breathlessly as yet another aspirant is summoned for their moment with the President. Just in front of the door, Janet Yellen still sits in a chair, arms crossed. She thought that she’d be called. All of her Congressional and industry lobbyists assured her she’d be called. He looks past her and sees Timmy G sitting with his arms crossed. “Please don’t let it be me,” he’s thinking. “I know what we’ve sold the Fed and I don’t want to be the owner of opportunity to try to sell what I couldn’t get anybody to buy when I was issuing debt at the Treasury.”
That scene is NOT what’s happening. Well, at least all but the Janet and Timmy G. bit which is metaphorically happening. The problem is that everybody knows one thing. Absolutely. That’s the fact that none of the contenders know how to end QE3 and keep the incumbent party holding any chance of electoral victory in 2016. Summers didn’t “bow out.” He probably had the integrity of admitting that he’s got no idea how to get out of the tar pit that has claimed the woolly mammoth, the saber-tooth tiger and the human hunter who wanted to get a break from chasing big game. And to be sure, as much as Janet’s advocates are sure she’ll keep the easy money train rolling for a few more quarters, she can’t answer this question either.
None of these ‘would-be’ Chairpersons are looking beyond the two and one half year electoral horizon. If they were, they’d see that their collective policies are compounding the gargantuan iceberg in front of the RMS America – the 11:40pm collision between unfundable entitlement programs and the now 4 year artificial suppression of interest rates which have wrecked the pensions and life insurance actuarial yields for the people upon whom the unfunded entitlement reality will land. So while the drama is real, the headlines’ promotion of the drama is the real theater.